Pot stocks fly even higher after Cronos details ‘landmark partnership’

Tilray and Cronos shares hit fresh records despite Citron short bets
Less than two months after its initial public offering, Tilray has seen shares more than quadruple.
Canadian cannabis company Cronos CRON, +5.74% announced what it called a “landmark partnership” with Boston biotech Ginkgo Bioworks Inc. on Tuesday morning that will seek to produce specific cannabinoids at scale. Cannabinoids are specific molecules in marijuana that can produce effects in the human body, with the most commonly known subclasses being Tetrahydrocannabinol, or THC, and cannabidiol, or CBD.
Some cannabinoids that are found only in very small quantities in marijuana are thought to be potentially beneficial to a range of illnesses, but producing enough to test those uses is difficult. Cronos hopes that Ginkgo can help with “a process similar to brewing beer in a microbrewery,” and has promised to fund about $22 million needed to research and develop an approach and issue up to 14.7 million shares to Ginkgo if the partnership meets predetermined milestones.
“The potential uses of cannabinoids are vast, but the key to successfully bringing cannabinoid-based products to market is in creating reliable, consistent, and scalable production of a full spectrum of cannabinoids, not just THC and CBD,” Cronos Chief Executive Mike Gorenstein said in Tuesday’s announcement.
“Achieving a cost-effective way to produce trace cannabinoids at scale would have significant value to Cronos and could be used to formulate unique medicinal products,” PI Financial Corp. analysts, who have a buy rating and $15 price target on Cronos stock, wrote in a note Tuesday afternoon. “Furthermore, Ginkgo’s technology, once perfected, could be duplicated in other jurisdictions (Canada, internationally) at relatively low capex
Cronos stock increased 12.9% Tuesday, and has gained nearly 500% in the past year, as the S&P 500 index SPX,-0.37% has risen by about 17% over the same period. The spike continues a volatile run for the stock, which saw
huge gains last month before prominent short seller Citron Research made a call last week to bet against Cronos shares, which coincided with a steep decline in the company’s stock.
Citron didn’t back down, though, adding another pot company target to its short list Tuesday with Tilray Inc. TLRY, -1.76%

https://www.marketwatch.com/story/highflying-pot-stocks-gain-more-altitude-after-cronos-details-landmark-partnership-2018-09-04